GBP/USD advances towards 1.1600 on novel UK Leadership, US ISM Services PMI eyed

The GBP/USD pair has given an upside break of the consolidation formed in a narrow range of 1.1512-1.1520 in the early Tokyo session. The asset has displayed a sheer upside as a volatility expansion has kicked in after a range breakout. Earlier, the cable witnessed a firmer rebound after hitting a low of 1.1450. Broadly, the asset was declining for the past few weeks amid political instability in the UK economy. Now, the announcement of a leadership change has strengthened the pound bulls.

After fighting for the leadership of the Conservative Party for more than two months, Liz Truss has finally won the elections and has been elected as the next UK Prime Minister. As announced by Liz Truss while presenting her capabilities for contender of UK leadership that she will scale down energy bills for households, pound bulls have started playing the road. Also, a situation of political stability in the UK economy will strengthen sterling.

Meanwhile, the impact of volatile energy prices has spread to energy suppliers. News from Financial Times cited that, Britain's largest energy supplier Centrica Plc is in talks with banks to secure billions of pounds in extra credit to meet soaring collateral demands as the energy market remains volatile.

On the dollar front, the US dollar index (DXY) has surrendered the psychological support of 110.00. The DXY is facing the heat of lower consensus for the US ISM Services PMI data. The economic data will decline to 55.5 from the prior release of 56.7. It seems that the consequences of the extremely hawkish Federal Reserve (Fed) are visible now and the US economic activities are declining. The unavailability of cheap money has forced the corporate to postpone the funds' channelization into afresh investment opportunities and expansion plans.